£2bn cost of Brexit is exorbitant – and that’s just the start

Labour Party

The cost of Brexit has been calculated at around £2 billion according to the think tank The Institute for Government.

It found that *six Whitehall departments will be particularly affected and in the region of 10,000 new roles will be created across the departments to cope with the additional challenges.

The think tank warned that even before the UK officially departs from the EU in March next year some £1.3 billion will have been spent on policy work alone.

The true cost of Brexit can’t be fully calculated until it happens of course, but many of us may recall that in his Autumn statement in 2017, the Chancellor Philip Hammond said that he had shared £250 million between Whitehall departments and that a further £3 billion would be set aside to fund Brexit over the course of the next two years.

Although it hasn’t been specified precisely how the money will be allocated it is expected that Defra will receive a large sum of money to devise a completely new agriculture and fisheries policy.

In addition, the Institute found that some departments such as the Home Office are using 50% more agency staff than it did before the referendum. If it continues using staff at the current levels it will have spent almost £40 million more on agency staff in the current financial year than it did in the year leading up to the referendum.

In many ways the additional allocation of funds shouldn’t come as a big surprise; however, the exorbitant cost of agency staff and consultants (in 2017 DExEU signed a £1.9m contract with McKinsey for just six months of work; and both BEIS and Defra signed £1m contracts with the Boston Consulting Group) is clearly an indication that the government departments are wholly ill equipped to cope with Brexit, and this is even before the UK is set to ‘leave’.

If the departments are reliant on agency staff now, then it is clear; the cost will almost certainly rise, and the budget set aside won’t be enough to cover the cost of experts to help the departments fulfil their obligations. And this is just in relation to the start transition period. We do not know the full cost for the transition period or beyond.

*The six core Brexit ministries are:
1. the Department for Exiting the EU
2. the Department for International Trade
3. the Department for Business, Energy and Industrial Strategy
4. the Department for Environment, Food and Rural Affairs
5. the Home Office
6. Her Majesty’s Revenue & Customs (HMRC).